The adoption tax credit is a lovely thing. It offers a direct financial benefit to families who adopt. The benefit is better for families who adopt special needs children. There is much written about the policy and mechanics of the federal adoption tax credit. It is not a new thing. And note that, like most tax provisions, not everyone is eligible and not every expense is covered, and there is a limitation of $17,280. But in the past, families needed t owe tax to use the credit. Effective 2025, $5000 of the credit will be refundable even for families who don’t owe tax.

I am not a tax lawyer. My goal here is to alert you to the change only.  If you or your clients are in a position to use the federal adoption tax credit, you can get more information at the IRS website.

https://www.irs.gov/credits-deductions/individuals/adoption-credit

Dawn

On May 19, 2025, a class action on behalf of 13 Tennessee foster children was filed in the U.S. District Court for the Middle District of Tennessee against the commissioner of the Tennessee Department of Children’s Services, alleging significant systemic failures, summarized in a preliminary statement, the first 3 paragraphs of the complaint included below.

Experienced Tennessee guardians ad litem appear on behalf of the children, and prestigious Tennessee and national law firms represent the plaintiffs. A National nonprofit children’s advocacy group, A Better Childhood, appears to be the primary organizer of the action. The class is not yet certified. To read the complaint and sign up for news on developments, see https://www.abetterchildhood.org/tennessee

PRELIMINARY STATEMENT

1. Tennessee’s foster care system is failing the children it is intended to protect.

Tennessee’s Department of Children’s Services (“DCS”) warehouses children in spaces which lack the basic necessities of life, including adequate food, bedding, soap, and potable water. Intended as temporary placements, DCS leaves children in these situations for months on end. Once placed in ‘long-term’ placements, children fare no better. DCS contracts with facilities which possess well-known track records of physical, mental, and sexual abuse. Children are placed in foster homes that have not been properly vetted, do not receive necessary information about the children, and do not receive the services necessary to care for them. Foster care is intended to be temporary, until children can either be reunited with their families or placed in another permanent home; however, children in Tennessee linger in foster care and are moved from place to place without the opportunity for a stable childhood.

2. The caseworkers required to support and protect foster children are overworked and undertrained. Due to crushing caseloads, DCS caseworkers are unable to reliably perform the basic duties necessary to oversee the well-being of the foster children assigned to their care. As concluded by a state audit in 2022, “[t]he safety, permanency, and well-being of Tennessee’s most vulnerable children is in jeopardy.”

3. DCS’s dereliction of care is no mere oversight or mistake. It has been previously sued in federal court for violating the rights of foster children. As a result of the suit, DCS improved many aspects of the foster care system, until the court ended its jurisdiction over DCS’s performance metrics in 2017. However, eight years later, the state of Tennessee’s child welfare system is just as bad, if not worse, than the crisis which engendered the previous lawsuit.

A Better Childhood’s advocacy goals for Tennessee from their website: www.Abetterchildhood.org

ADVOCACY GOALS

Keira M. v. Quin requests that the court prohibit DCS from subjecting the children in the general class and the ADA subclass to practices that violate their rights. The case seeks an order directing the state and DCFS to, among other things:

• Provide all children who enter foster care placement with an adequate and individualized written case plan within 60 days;
• Ensure all children who enter foster care placement receive necessary medical and therapy services;
• Ensure that children are only placed in homes that can meet their needs;
• Develop a process to properly match children with appropriate and safe foster homes, and prioritize keeping sibling groups together;
• Improve recruitment and retainment practices of appropriately trained caseworkers;
• Lower caseloads of individual workers to professional standards;
• Ensure that children with disabilities are provided with the services they need in their community.

Every Tennessee child welfare lawyer and juvenile judge I know who offers an opinion on the function of Tennessee’s child welfare system describes it as “worse than ever,” often using terms like “free fall,” “imploding,” and “systemic child abuse.” Caseworkers and DCS lawyers, too, often openly acknowledge the systemic chaos. Many foster parents are dismayed by the impact on the children they love.

In many forums, including an op ed posted on this blog and in Tennessee newspapers in January 2023, https://www.tennessean.com/story/opinion/contributors/2023/01/03/public-outcry-needed-to-fix-tennessee-department-of-children-services/69774889007/ , I’ve called for recognition of the severity of the problem and DCS’s adoption of proven management practices and standards used in states whose systems work better, but the steep decline has only continued. My legal career began in 1987, and the Tennessee Child Welfare has never been worse. While I regret that a lawsuit is necessary, it is. I wish the Plaintiffs every success.

Adoption assistance is a program to assist adoptive families of special needs children. The program is state-administered with the majority of funding from the federal government and a state contribution as well. The benefits are usually a monthly stipend and health insurance, which may be secondary where private insurance is available.  There are some technical requirements for adoption assistance concerning the exact needs of the child and the financial situation of the birth parent at removal. However, there is no “means test” for the adoptive parents, which means the adoptive parents’ income and assets are not considered for the eligibility determination.

A broad overview of navigating adoption assistance is found at https://dawncoppock.com/adoption-assistance-for-foster-parents/

But here are 3 important things to know about adoption assistance for newborns who were exposed to drugs before birth.

• Adoption assistance is never available in a private adoption, where the child is placed directly from the birth parent to the adoptive parent(s) with no agency, state or private, in between.
• Private agencies may apply for adoption assistance on behalf of private agency clients, but the state of Tennessee administers those applications and doesn’t make it easy. Still, at least this path can work, and it is particularly effective for children premature or sick enough to qualify for the Social Security program SSI. If you want to try this path, you will need a lawyer familiar with this process very early in the adoption planning.
• Children who are in the guardianship of the state of Tennessee and who were exposed to drugs before birth are almost always qualified for at least deferred adoption assistance. Deferred adoption assistance usually means that the door is left open for the adoptive parents to apply for adoption assistance when the child manifests problems that require treatment. It may or may not also include payment of legal fees and even access to health insurance. But it does not include a cash stipend.

But if the child is “Receiving Services” at the time adoption assistance is calculated the child should be eligible for the stipend and the other benefits. So, the key for pre-adoptive parents or drug-exposed children is for the child to be receiving services when assistance is determined. Services are things like therapy with TEIS, regular supervision of a medical condition by a doctor, physical, speech, feeding, or occupational therapy.  Sometimes, foster parents will take a break from therapy or fail to promptly follow up on a medical referral thinking that they will proceed after the adoption is finalized. Avoiding any interruption in the child’s services is a far better approach if the foster parents don’t want to undermine the child’s eligibility for adoption assistance.  

— Dawn Coppock — March 2024

Question: I understand that the waiting period for adoption, the time the child must live with the prospective adoptive family before the adoption can be finalized, has been reduced from 6 months to 3 months, correct?

Answer: Not exactly. The waiting period is still 6 months but the judge in the case CAN, but does not have to, reduce the wait to 3 months. Judges are expected to be most open to reducing the waiting period in newborn adoptions. When older children are new in a home at least 6 months for the child and family to adjust to one another and for problems to arise and be resolved is usually recommended by social workers and is good common sense in most cases. Judges know this and often will not reduce the waiting period for children older than newborns. Also, when an agency has guardianship of the child, as in DCS or private agency adoptions, the agency’s consent is required. Agencies typically will not consent until they feel the family has had sufficient time to settle in together. Regardless of the waiting period, when a child is in full guardianship of an agency, an adoption cannot be finalized until the agency is ready to consent.